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. Last Updated: 07/27/2016

Tax Dispute Hits Mobile Firm Profits

Mobile phone firm VimpelCom announced fourth-quarter earnings below market expectations Thursday after the company took a charge related to a tax dispute.

Earnings according to U.S. generally accepted accounting principles came in at $198 million, down from $268.4 million in the preceding quarter and below an average forecast of $238.2 million in a poll of 10 analysts.

Analysts noted that VimpelCom took $42.5 million in charges related to litigation with the Federal Tax Service, and said sales and revenues per user were stronger than consensus forecasts.

"Overall, this is a good set of results and there is no reason for concern," said Vitaly Kupeyev, telecoms analyst at Alfa Bank.

Although net profits were up by 30.4 percent year on year, analysts focus on consecutive figures, which are typically depressed in the fourth quarter by costly year-end promotional campaigns.

VimpelCom's showing still looked favorable by comparison with market leader Mobile TeleSystems, which has already reported a sharp drop in fourth-quarter earnings after writing off a large investment.

n VimpelCom said Thursday there was a risk that it might not get a license that would help it offer faster mobile phone services, such as video-conferences and mobile television, CEO Alexander Izosimov said, Bloomberg reported.

As many as 12 operators, including VimpelCom and its two main rivals in Russia, MTS and MegaFon, have applied for the so-called third-generation permits. The three winners will be announced April 20.